This question came up after reading the question Why isn't everybody rich?, which asks why so many people aren't "rich" when there's such a simple strategy to get there (cut spendings and invest in index funds like the S&P 500).

The two most top-voted answers suggest that it is mostly a problem of people not having enough discipline to cut spendings or not being financially literate enough to understand that the simple strategy will lead to their financial well-being. Other answers claim that it's mostly a zero-sum game and people can only get "rich" at the expense of others.

Putting aside the question of what exactly it means to be "rich": What would really happen if much more people started acting according to the simple strategy of putting as much money as possible into index funds?

In the extreme case of everyone following the strategy, demand would decline and economic growth would probably stop. So somewhere, there needs to be a point where the strategy stops working.

So what are the economic conditions for people being able to substancially improve their financial standing by following the strategy?

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    I think you overlooked the answers that conclusively proofed that not everyone has enough disposable income to get rich that way. How to you account for those in the context of your question?
    – Daniel
    Commented May 3, 2018 at 12:11
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    Suppose you make $50k per year and after tax, tag and title (bare bones spending) you have $5k left over to invest. Do you think that it's "mostly a problem of people not having enough discipline to cut spending or not being financially literate enough to understand that the simple strategy will lead to their financial well-being" ??? Commented May 3, 2018 at 13:06
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    Related: (maybe dupe?) At what point do index funds become unreliable?
    – PGnome
    Commented May 3, 2018 at 13:50
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    Spend less than you earn, save (or invest) the difference. Simple and straight forward, yet difficult to do as it requires discipline, patience, and long term thinking. Commented May 3, 2018 at 14:39
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    @Daniel Which answers on that question conclusively proved anything of the sort? This question (as with any other hypothetical) makes assumptions. The destitute poverty that prevents any investment can be mitigated through education. This question seems to assume a lot of (financial) education is suddenly disseminated to the masses. How can you assume that without assuming the prerequisite education to understand the financial aspects of life? Commented May 3, 2018 at 18:30

2 Answers 2


I think the title of your question is a bit impossible to answer in the specific sense, but theoretically I would say: "zero".

Rather than saying "rich", I prefer to call it "building wealth". Having friends and family and other aspects of life are more important than just having a boat load of money. An example of this is paying for the vacation of adult children and their spouses. One can save a lot of money by not doing so, but many choose to do exactly that so relationships are built between the siblings and between the children and parents.

The key thing to understand is that building wealth is a behavior driven process that involves serving your fellow human extremely well. One aspect of that service is to invest in companies. Sure, the naysayers can point to various "lottery" winners, but for the bulk of us that simply will never happen.

So how does one become first generation wealthy? How does one, with no special connections, no rich relative become comfortable (or more) financially? About 60-80% of "wealthy" folks, at any given time, qualify as this first generation wealthy.

The answer starts with service. Whatever that first job is, save some, give some, and spend some. Yep giving, a decent portion of your income, should be part of your wealth building plan. Investing in companies is serving the community, the employees, those that purchase the product, and of course the business owners. In your own profession you should serve your "customers" to the best of your ability.

If you make french fries in your current profession, make the very best you can. If you are a police officer, serve the citizens to the best of your ability. Whatever. There is no reason you have to do your current job forever and the better the job you do currently the more likely more profitable opportunities will exist in the future.

In the question noted in your post my answer mentioned that one could accumulate a great deal of money by simply "smoking", or investing what a typical smoker spends on cigs. However, it never works like that. Some people accumulate 10k or so and use it to buy a fancy car and with the payments can no longer afford to invest. Same kind of thing with a house when the account gets to something like 50k.

However those that really understand this, and sometimes it takes time and maturity to get there, invest far more than the 170 or so per month. Those kind of people can build generational wealth.

The statistics of net worth and income are interesting to study that shows this bears out.


How rich?

I answered a similar question: Can saving/investing 15% of your income starting age 25, likely make you a millionaire?

That question (though US centric) was more clear-cut, because instead of using a nebulous concept of rich, it asked if a quantifiable number is achievable. I demonstrated in my answer that $1 million is achievable under a certain set of assumptions.

I don't know how to quantify the number of people who have managed to accumulate wealth specifically through index funds. The choice of investments varies widely. Some people buy a house, live there a few years, convert it to a rental, buy another house, rinse, repeat. Many of the recognizably wealthy people start businesses, struggling for years before the business becomes successful enough for a big payout. The point isn't whether index funds can do it. They can. But that's not the only strategy people use.

Is there a limit?

Without delving too far into the weeds on a discussion of economics, there is some question of whether the stock market is a little overpriced because so many people are pouring their money into index funds. I see evidence that the successful companies maintain their positions in the S&P 500, and the less successful companies drop out of the index. The market seems to take care picking the winners and losers.

The question you add about what would happen to a local economy if people saved instead of spending their discretionary income on consumer goods is also academic.

There isn't a hard limit to the number that can achieve wealth this way. If everyone suddenly started reducing consumption, there would be a short-term economic contraction as the companies that were relying on that consumer behavior started failing. Eventually people would all migrate to industries that remain productive, and growth would resume as the unprofitable companies cleared the way for those that remain profitable.

In the end, if there was no demand for consumer goods, the excess capacity would be redirected to what is wanted. If that included only food, shelter, and medical expenses, we would see more farms (international trade for seasonal items, but mostly domestic), housing (mostly local construction companies), and hospitals (employing locals).

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